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19 July 2011 early edition/transcript/Part 8
Part 8 JOHN WHITTINGDALE: I appeal for brevity, because we have been going for two hours now. ALAN KEEN: I will be as brief as I can. To James Murdoch, it is a mystery to us how Sunday newspapers are run. I am very familiar with the engineering industry. Could you try to paint a picture of a week's operation at the News of the World? At what period were you closely involved in controlling the News of the World? JAMES MURDOCH: My involvement in the business is overseeing the region of Europe and Asia. Just to be clear, in 2008, starting in the middle of December 2007, I was chief executive for Europe and Asia, our European television business and our Asian television business as well as our UK publishing business, one title of which is the News of the World, so I cannot say that I was ever intimately involved with the workings of the News of the World. Q368 KEEN: What results would come to you within seven days of publication? Presumably, the sales and the advertising income, and you would judge the newspaper on its profitability week by week. I know that Rupert Murdoch is far removed from that, but when you were in close proximity— RUPERT MURDOCH: I certainly get that from all over the world, every week. JAMES: These are enterprises; and sales, advertising figures and personnel numbers are relevant. Managers look at those things. Q369 KEEN: We understand from questions that have been answered already that when it comes to legal issues—settlement of claims—that is taken outside the day-to-day management of the newspaper. That is right, isn't it? JAMES: Each group of companies or titles will have their own legal executives who deal with things such as libel, or other things. They will try to check that something does not go into the paper that is going to be wrong; sometimes that is gotten right, and sometimes it is wrong. Each has its own legal resource and the managing editor's office is very involved in those things as well as the counsel's office in the newspapers. RUPERT: To give you an example of my son's typical week, it could well have been a day in Munich, or a day in Sky Italia where he had a particularly difficult situation with a particularly tricky competitor, if I may say so. He had a lot on his plate. Q370 KEEN: I will leave some of the more mundane issues. It became clear from the first couple of questions to you, Rupert Murdoch, that you have been kept in the dark quite a bit on some of these real serious issues. Is there no— RUPERT: Nobody has kept me in the dark. I may have been lax in not asking more, but it was such a tiny part of our business. Q371 KEEN: I understand that, but obviously you have come to this point—you would not be here if it was not extremely serious. RUPERT: It has become extremely serious. Q372 KEEN: Are there no written rules that certain things have to be reported straight to the very top. It sounds as if there are no such rules; it is left to the trust— RUPERT: Anything that is seen as a crisis comes to me. JAMES: Mr Keen, may I? It is important to know that there is a difference between being kept in the dark, and a company that is a large company, the management of which is delegated to managers of different companies within the group, and so on and so forth. To suggest that my father or myself were kept in the dark is a different thing from saying that the management and the running of these businesses is often delegated either to the chief executive of a different company, an editor, a managing editor or an editorial floor, and decision making has to be there. There are thresholds of materiality, if you will, whereby things have to move upstream, so something has to be brought to the attention. From a financial threshold point of view, we addressed that earlier with respect to the out-of-court settlement with Mr Taylor. But from the standpoint of things like alleged criminality, violations of our own code of conduct and things like that, those are things that the company's internal audit function—the audit committee, as well as the senior executives of the committee—expect to be made aware of, as they were in the case of the criminal prosecutions in 2007. Q373 KEEN: Whatever efforts were made and whatever rules there were, News International has reached a crisis point, otherwise you would not be here today and the News of the World would not have been closed. Who really is responsible? Who do you hold responsible for that failure? You are saying that people should have told you. No, you are really saying to us now not that they should have told you, but that you let them get on and manage it, but they should have told you, shouldn't they? What has gone wrong? JAMES: Mr Keen, that is a good question. But that is not to say that we are saying—and I am not saying—that somebody should have told me. To my knowledge, certain things were not known. When new information came to light with respect to my knowledge of these events—to my understanding, when new information came to light—the company acted on it. The company acted on it in a right and proper way, as best the company could, but it is difficult to say that the company should have been told something if it is not known that a thing was a known fact to be told. I have been asked today about what other people knew when, and I can only rest on what they have told me or what they have told you in previous hearings. I understand completely your frustration about this. You can imagine my own frustration in 2010, when the civil litigation came to a point where these things came out, to suddenly realise that the pushback or the denial of the veracity of allegations that had been made earlier, particularly in 2009, had been too strong. That is a matter of real regret, because all the facts were not known when that was done. That is a matter of deep regret, and it is why we are here with you today, trying to be as transparent as we possibly can. Q374 KEEN: This is, I suppose, really a rhetorical question—I am sure your answer will be what I expect—but it is admirable that you have had such long-term employees who, I am sure, have become very close friends over the years. Mr Rupert explained that with his determination to look after Rebekah Brooks, so it is admirable. There was a lot of criticism in the financial press at the time—this is not a criticism, James, of your ability—that it was nepotism to appoint you, in retrospect. That is why I say that it is a rhetorical question and I know what the answer will be. Do you regret, Mr Rupert, that it has become really a family organisation for all its— RUPERT: Let me just go back over this. When the job became available of head of BSkyB, several people applied, including my son. He passed through all sorts of not just board committees but outside experts, etc. who made the conclusion that he was the right person. The press all had a field day. When he left to go to—when I promoted him to take charge of much wider responsibilities, we had calls from all the big shareholders, or many big shareholders, saying that it was a terrible thing to take him away because he had done such a great job. Q375 KEEN: I was not disputing James's ability. But the fact that he did not know about so many of these criminal activities that went on, do you not think that was made more likely because of the sort of family history? I do not just mean James here. I am talking about people who were not direct members of your family but became friends. It is admirable, but you don't think that that has had an effect. RUPERT: I don't think— Q376 KEEN: You don't think that that is a factor in the mismanagement, because it has been mismanaged. RUPERT: I don't think Mr Hinton misled me for a minute, but you must find out for yourself and make your own conclusion. Other people who gave the same evidence may well have been misleading you but he certainly did not know of anything that happened.